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Apple Inc. (AAPL) said it is "stunned" to discover iPhones use a "completely wrong" formula to display signal strength, The Associated Press reported.

Many users of the new iPhone 4 have complained that the signal strength drops dramatically if the phone is held in a certain way.

Apple now says that this drop is exaggerated because the iPhone is often overstating signal strength.

"Their big drop in bars is because their high bars were never real in the first place," the company said in a statement.

The company says that the incorrect formula was also present in the original iPhone, launched in 2007. The company will fix its signal strength formula to conform to other AT&T phones through a free software update within a few weeks, the AP reported.

"We are also making bars 1, 2 and 3 a bit taller so they will be easier to see," Apple said.